CION Featured in PDI │Interval Funds: The Cash-Back Option

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Sep 12, 2017

CION Featured in PDI │Interval Funds: The Cash-Back Option

Interval funds – hybrids between hedge funds and closed-end debt funds which repurchase investor shares at regular intervals – are in vogue in the private credit world. The US Securities and Exchange Commission has declared effective 38 active interval funds, which have amassed $16.12 billion in net assets between them as of 8 August, according to data collected
by Interval Fund Tracker. The main difference between these hybrid funds and a typical debt fund is that the interval fund manager periodically buys back investors’ shares, which cannot be traded on a secondary market. Interval fund managers must allow investors the option to purchase 5-20 percent of the fund’s equity at select intervals, usually quarterly or semi-annually, and they are required by law to price these shares at net asset value allowing investors more liquidity than your run-of-the mill long-term debt fund.

* The public offering price is subject to a sales load of up to 5.0% (which consists of selling commissions of up to 3.0% and dealer manager fees of up to 2.0%) and offering costs up to 1.5% of the actual gross proceeds raised from this offering. The offering price is also subject to adjustment as provided in the offering prospectus and pursuant to the terms of the offering. The offering price will be adjusted, if necessary, to ensure shares are not sold at a price per share, after deduction of selling commissions and dealer manager fees, that is below net asset value. Past performance is not a guarantee of future results. Please see the current prospectus, as amended and supplemented, for more information including, but not limited to, annual fund expenses. The offering price will be listed on the current prospectus, as amended and supplemented.

** Current distribution rate is expressed as a percentage equal to the projected annualized distribution amount (which is calculated by annualizing the current regular weekly cash distribution per share without compounding), divided by the relevant public offering price per share. The current distribution rate shown may be rounded.

The determination of the tax attributes of distributions is made annually as of the end of the fiscal year based upon the taxable income and distributions paid, in each case, for the full year. Therefore, a determination as to the tax attributes of the distributions made on a quarterly basis may not be representative of the actual tax attributes for a full year. Shareholders should expect to be updated quarterly with an estimated percentage of distributions that resulted from taxable ordinary income. The actual tax characteristics of distributions will be reported to shareholders annually on a Form 1099-DIV. The payment of future distributions is subject to the discretion of the Board and applicable legal restrictions, and therefore, there can be no assurance as to the amount or timing of any such future distributions.

Cash distributions may be funded from any available source, including offering proceeds, borrowings, net investment income from operations, capital and non-capital gains proceeds from the sale of assets, dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies and expense reimbursements from CION Investment Group, LLC (“CIG”), which are subject to recoupment. To date, distributions have not been paid from offering proceeds or borrowings. To date, if expense reimbursements from CIG were not supported, some or all of the distributions may have been a return of capital for tax purposes; however, distributions have not included a return of capital for tax purposes as of the date hereof. Limits have not been established on the amount of funds that may be used from available sources to make distributions. Through December 31, 2014 a portion of distributions resulted from expense reimbursements from CIG and future distributions may result from expense reimbursements from CIG and Apollo Investment Management, L.P. (“AIM”), each of which are subject to repayment within three years. The purpose of this arrangement is to avoid such distributions being characterized as returns of capital for tax purposes. Shareholders should understand that any such distributions are not based on investment performance, and can only be sustained if positive investment performance is achieved in future periods and/or CIG and AIM continue to make such expense reimbursements. Shareholders should also understand that future repayments will reduce the distributions that they would otherwise receive. There can be no assurance that such performance will be achieved in order to sustain these distributions, or be able to pay distributions at all. CIG and AIM have no obligation to provide expense reimbursements in future periods.

The sources of distributions may vary frequently. Please refer to the current and future annual quarterly reports filed with the SEC for the sources of distributions, by amount and percentage.

This is neither an offer to sell nor a solicitation to purchase the securities described herein. Such an offering is made only by means of a prospectus. Please read the prospectus prior to making any investment decision and consider the risks, charges, expenses and other important information described therein. A copy of the prospectus must be made available to you in connection with any offering. Click here to view the prospectus. Neither the Securities and Exchange Commission, the Attorney General of the State of New York, nor any other state securities commission has approved or disapproved of these securities or determined if the prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

CION Securities, LLC, member FINRA/SIPC, serves as the distributor for CION Investment Corporation, advised by CION Investment Management, LLC. Check the background of this firm on FINRA’s BrokerCheck.

CION Ares Diversified Credit Fund:

* The public offering price is equal to the NAV plus a sales load of up to 5.75% (which consists of selling commissions of up to 5.0% and dealer manager fees of up to 0.75%) and offering costs of up to $0.25 per share. Past performance is not a guarantee of future results. Please see the current prospectus, as amended and supplemented, for more information including, but not limited to, annual fund expenses.

** Current distribution rate is expressed as a percentage equal to the projected annualized distribution amount (which is calculated by annualizing the current daily cash distribution per share without compounding), divided by the relevant net asset value per share. The current distribution rate shown may be rounded.

The tax characterization of distributions cannot be determined until after the end of the tax year. As a result, total distributions during a tax year may exceed current and accumulated earnings and profits. A distribution of an amount in excess of current and accumulated earnings and profits will be treated as a return of capital. Distributions will be treated in the manner described regardless of whether such distributions are paid in cash or reinvested. Generally, for U.S. federal income tax purposes, shares received under the DRP will be treated as having received a distribution.

A portion of distributions may be a direct result of expense support payments provided by CION Ares Management, LLC (“CAM”), which are subject to repayment by CADC within three years. The purpose of this arrangement is to ensure that CADC bears an appropriate level of expenses. Any such distributions may not be entirely based on investment performance and can only be sustained if positive investment performance is achieved in future periods and/or CAM continues to make such expense support payments. Future repayments will reduce cash otherwise potentially available for distributions. There can be no assurance that such performance will be achieved in order to sustain these distributions. CAM has no obligation to provide expense support payments in future periods.

CADC may fund distributions from unlimited amounts of offering proceeds or borrowings, which may constitute a return of capital, as well as net income from operations, capital and non-capital gains from the sale of assets, dividends or distributions from equity investments and expense support payments from CAM, which are subject to repayment. For the year ending October 31, 2017, distributions were paid from taxable income and did not include a return of capital for tax purposes. If expense support payments from CAM were not provided, some or all of the distributions may have been a return of capital which would reduce the available capital for investment. The sources of distributions may vary periodically. Please refer to the semi-annual or annual reports filed with the SEC for the sources of distributions.

This is neither an offer to sell nor a solicitation to purchase the securities described herein. Such an offering is made only by means of a prospectus. Please read the prospectus prior to making any investment decision and consider the risks, charges, expenses and other important information described therein. A copy of the prospectus must be made available to you in connection with any offering. Click here to view the prospectus.

CION Securities, LLC (“CSL”) is the wholesale marketing agent for CION Ares Diversified Credit Fund, advised by CION Ares Management, LLC (“CAM”) and distributed by ALPS Distributors, Inc (“ADI”). CSL, member FINRA, and CAM are not affiliated with ADI, member FINRA. Check the background of this firm on FINRA’s BrokerCheck.